The global economy is increasingly interconnected. This presents greater opportunities for many citizens and businesses, but also for a range of illicit networks that foster criminal activities. Illicit trade creates an enormous capital flow from outside of the formal economy, not only resulting in loss of revenue for governments and industries, but also jeopardizing public health and security, and enriching criminals who have a vested interest in undermining the rule of law.

The OECD Task Force on Countering Illicit Trade (TF-CIT) was established to advance the resilience of our economies and societies to the odious global threat: illicit trade perpetrated by criminal entrepreneurs and transnational illicit networks that enables the global illegal economy to thrive in the dark side of globalization. In too many places around the world, criminals have built their illicit empires on dirty money and laundered funds to infiltrate and corrupt government institutions. In this shadowy, illegal economy traffickers and narcotics kingpins act as CEOs and venture capitalists while they build their empires of destruction, jeopardizing public health, emaciating communities’ human capital, eroding our collective security, and destabilizing fragile governments. The breadth and scale of these illicit markets are vast; various international organizations estimate the scale of illicit trade is thriving with hundreds of billions of dollars in illicit commerce that includes trafficking in narcotics, persons, endangered wildlife, illegallylogged timber, counterfeit consumer goods and medications, hazardous and toxic waste, stolen antiquities and art, illicitly-traded cigarettes, and other illicitly-traded goods and commodities.

Illicit trade is a worldwide phenomenon. Globalisation has provided opportunities for criminal networks to expand the scope and scale of their operations, with serious negative consequences for the economy, the environment and society. Illicit trade also undermines good governance, the rule of law and citizens’ trust in government, and can ultimately threaten political stability.

This chapter discusses the global characteristics of illicit trade, providing context about its growth, and highlighting expert estimates about such major sectors as trafficking in narcotics, persons, wildlife and several categories of counterfeit goods. It describes the policy implications of transnational organized crime as a lynchpin in the convergence of illegal markets, and outlines the challenges in current policy responses to reduce or deter illicit trade, and suggests how enhancement and leveraging of existing information sources could help efforts to counter this global scourge.

It is estimated that thousands of people have lost their lives attempting to migrate to Europe in 2015. The migrant crisis has drawn unprecedented attention to the dangers of human smuggling, but it has done little to improve understanding that the crimes of “human trafficking” and “smuggling of migrants” are distinct forms of organized crime. Smuggling is a crime against the state, involving facilitation of illegal crossing of borders for a fee. Trafficking is a crime against a person, involving the ongoing exploitation of another human being in forced labour or forced prostitution. This chapter provides aggregate information about the profiles of trafficked persons worldwide, thee numbers of persons trafficked, where they come from and where they go, some of the most oft cited estimates about the market value of trafficked persons. The social harms of this criminal activity are readily apparent, thus the chapter outlines some of the economic harms to source and destination countries.

Demand for elephant ivory and rhino horn has driven dramatic growth in illegal wildlife markets in recent years due primarily to a growing consumer base in East Asia. All forms of wildlife trafficking taken together constitute one of the most lucrative forms of illicit trade, according to some estimates, and the sector has more than doubled since 2007. This chapter points to publicly available reports on population declines, trafficking routes and the quantity of wildlife contraband reported. It highlights reports on the geographic hubs and hotspots of wildlife trafficking routes, and argues that monitoring and enforcement in source countries can be effective means to reduce poaching, but capacities are low and need support in the form of training and information systems. It presents the Information Sharing Platform built for the OECD Task Force on Charting Illicit Trade, and encourages stakeholders to join this to reinforce collective action to counter illicit trade in wildlife.

This chapter presents an assessment of illicit trade in counterfeit medicines, which in the 21st century has changed starkly in its geographical scope and pervasiveness across different product classes. Masquerading as curative medicines, counterfeit pharmaceuticals are increasingly prevalent and profitable. In addressing the threat of counterfeit drugs, there is obvious scope for benefiting both consumers and international pharmaceutical firms. Pharmaceutical counterfeiting has been identified over thirty years ago but went undiscussed. The industry now not only readily concedes counterfeiting is a threat to its business, in some cases it publicly addresses the strategies and anti-counterfeiting technologies in use and development. Acknowledging the problem enables better partnering with governments, health advocates and other supply-chain entities, since the incentives are aligned to prevent counterfeiting. In light of the more public and more aggressive campaigns against counterfeiting, it is important to examine the extent of the problem, what is known about counterfeit production and distribution, the links to organised crime and the policy responses that have been particularly effective. This paper reviews each of these in turn, as well as new policy initiatives that appear promising.

The illicit trade in tobacco is perhaps the most widespread and most documented sector in the shadow economy. It has been estimated that 570 billion illicit cigarettes were consumed worldwide in 2011. Illicit tobacco is therefore an important source of revenue for criminal networks, and it deprives government services of excise tax revenues at the same time. This chapter describes the different types of illicit tobacco products, explains some of the methods for measuring the markets and suggests measures that could be taken to impede this criminal activity.

Narcotics have long been one of the most valuable illicit markets, and government efforts to stem both their supply and demand face on-going challenges. This chapter describes the global distribution of major illegal narcotics from source to destination with a focus on heroin and cocaine routes. It explains how traffickers seek out states with weak administrative structures, law enforcement and customs as it is less costly to move illegal wares through states that suffer from weak institutions and a significant informal economy. The links to such areas has grown with the spread of globalisation, and collaboration between criminal enterprises to terrorist organisation has become more prominent. The author concludes that State building and enhancement of good governance practices are key complements to punitive approaches and sanctions.

This chapter presents an assessment by industry stakeholders of the illicit trade in alcohol with a focus on spirits and beer. Transnational criminal networks profit from trafficking and illegal trade in alcoholic beverages, whether by evading the payment of duty on goods or dealing in otherwise unbranded products. It is estimated that billions of dollars from these activities flow through the global economy each year, distorting local economies, diminishing government and legitimate business revenues, and in some cases posing a serious health risk to consumers.

Global sporting events and the revenues of their immediate derivative products, such as televised events and sports betting, have been growing at an exponential rate. A negative side effect of the globalisation of sports has been an increase in abuse of the betting market as a mechanism for money laundering. This chapter argues that a patchwork of policies against illegal betting and frameworks for sports governance is currently exploited to fuel the criminal economy by providing a means to launder massive amounts of illicit revenues. Criminal individuals and groups have been known to penetrate leagues and teams through ownership or contractual arrangements, which positions them to manipulate results. The authors argue that the cases of manipulation could be far more numerous than is currently reported or acknowledged due to a lack of sufficient fraud detection resources and weak surveillance. They conclude with a call for the adoption of more effective preventive measures, and for enhanced means to detect and/or report incidents through an internationally co-ordinated, pro-active response.